Waitrose has increased the minimum price it will pay for British beef cattle to £3.45 per kilo, and said it will guarantee the new price until 1 October.

The retailer initially introduced a “floor price” for beef through its dedicated processor Dovecote Park in May at £3.40 per kilo, which it said would be guaranteed until September.

But with ongoing price  volatility in the beef market, the retailer warned a “further erosion would not serve processors or producers well” and raised the minimum price for what it called “a key part of our business” by £0.05 per kilo.

Waitrose will also pay farmers an additional £0.02 per kilo (deadweight) for British cattle for its Essential Waitrose line.

“The farmers who supply us are the lynchpin of our fresh food business and we believe it’s vital to have long term relationships with them founded on fairness and trust,” said Waitrose director of agriculture Heather Jenkins. “We recognise that the beef industry is facing challenging times in the current market and we want to send a positive message to our producers.”

The announcement by Waitrose was welcomed by the NFU’s chief livestock adviser, Pete Garbutt.

“This is positive and it shows they are taking a long-term view and working to build the confidence that farmers need,” he said.

Garbutt added Waitrose farmers “felt secure” and suggested other retailers had shown interest in implementing similar minimum pricing guarantees at last week’s beef industry summit.

“We have spoken to other retailers about the need for long-term confidence and contracts. Quite a few were interested in looking at it further,” he said.

The beef industry summit, chaired by Defra minister George Eustice on 1 July, saw farmers, processors and retailers agree to explore the possibility of creating a voluntary code of conduct on farmer contracts. It will reconvene in the autumn.